November 28, 2020

How to Make Smarter Plans with Strategic Thinking

Productivity has two main modes. The first is what we like to call “robot mode,” in which you’re executing plans you’ve made.

Much of our productivity advice relates to this robot mode, on how to motivate yourself to do work right now. This encompasses everything from the Pomodoro technique to setting up an efficient workspace.

However, there’s another equally important productivity mode that we don’t discuss as often: planning mode.

After all, even the best execution doesn’t matter if the underlying plan is flawed. This applies in small matters such as planning a final project or planning your day, but also in larger matters such as deciding where to live or saving for retirement.

One of the keys to making useful, effective plans is thinking strategically. But if you haven’t tried to do it consciously, strategic thinking can be strange and difficult. What is strategic thinking, why is it so important, and how can you apply it in your daily life?

What Is Strategic Thinking?

Before I go any further, this article isn’t about strategic thinking or strategic planning in a business context. HBR has many excellent articles on the subject, as does Wikipedia (not to mention the many books). If that’s what you’re looking for, I’d direct you to those resources.

Instead, I’m interested in strategic thinking on a personal level. How can we as individuals think more strategically about our careers, goals, and lives in general?

In this context, then, strategic thinking means thinking long-term to guide your short-term plans and daily tasks.

For instance, you might use strategic thinking to choose a major. From there, you could then apply more of the “robot mode” productivity advice to help you actually get the degree.

But is all this strategizing and planning worth the trouble? Absolutely, especially if you want to remain relevant in a rapidly changing economy.

Why Strategic Thinking Matters

Strategic thinking prevents you from focusing so much on the present moment that you neglect the broader forces that shape your life.

For instance, if you only focus on being good at your current job, you might overlook new technologies or organizational changes that end up making you unemployable.

Instead, you also need to consider your broader career strategy and how the work you’re doing (and the skills you have) fit into it. This way, you can develop a range of skills and connections to help you weather the potential demise of your position, company, or even entire industry.

Furthermore, even if your only goal is to be as good as possible at your current job, the ability to think strategically is still an asset. Computers are getting better and better at performing mundane knowledge work tasks such as creating spreadsheets, transcribing audio, and even basic writing tasks.

However, humans still are superior to computers when it comes to strategic thinking and long-term planning. So if you can develop those strategic thinking skills, you’re going to be much more valuable to your company.

4 Ways to Think More Strategically

Now that we understand what strategic thinking is and why it matters, let’s get to the meat of the topic. What are some concrete ways you can think more strategically?

The full range of possibilities is too vast to discuss in one article. However, here are a few techniques you can start using right now to bring more strategy into your thinking and planning:

Think Long-Term

To think strategically, you need to take the long view of things. This doesn’t mean you neglect what’s happening now, but rather that you don’t get so wrapped up in present, day-to-day concerns that you forget to consider the future.

For instance, a lot of students tend to put all of their energy into excelling in their major, making the highest grades and taking the most difficult classes they can. High grades and challenging coursework can be important to your future, especially if you plan to go to graduate or medical school.

But putting all of your energy into them can backfire once you graduate and have never done an internship, worked on an independent project, or done any networking (not to mention making friends and developing your social skills).

If you’re thinking strategically and considering the long-term, you’ll recognize that the grade you got on a particular paper won’t matter in 5 or 10 years. However, the connections and career foundations you built will.

Don’t focus so much on doing well now on small, specific things that you forget to plan for the future.

Perform a “What-If?” Analysis

You can boil much of strategic thinking down into this process:

“If X happened, how would it affect my goals and plans?”

This is called a “what-if?” analysis, and it’s an extremely powerful tool for making big decisions and high-level plans.

The goal of asking “what if?” isn’t to predict the future. Rather, it’s to consider a variety of possible futures and then make the best decision you can with the information available. This won’t lead to fool-proof plans (there’s no such thing), but it will help you make better, “less wrong” plans.

What-If Analysis in Practice

To illustrate this, let’s take a topic everyone has to worry about: money. Specifically, budgeting and financial planning.

Deciding that you want to budget, save money, and plan for retirement is great, but there are many possibilities to consider there. A what-if analysis can bring clarity to your financial planning process, helping you answer scary and exciting questions such as:

  • What would I do if I lost my job?
  • When will I be able to buy a house?
  • What’s the smart way to spend any extra money I make through a raise or side job?

To make these financial “what-if” analyses easier, Thomas created a budget modeler spreadsheet that I highly recommend you check out. Using this spreadsheet, you can plug in different numbers for income, expenses, and other financial variables to help you simulate different financial scenarios.

For instance, you could see how much you’d need to earn per month if you wanted to afford a mortgage, or how you’d need to cut your expenses if you took a pay cut or lost your job. And on the more exciting side, you could see how a potential raise could increase your retirement savings or even pay for a vacation.

Note: While we love spreadsheets, you don’t need them to perform a “what-if” analysis. In many cases, simply writing down and thinking through different “what-if” scenarios is enough to help you make better plans and decisions.

Update Your Plans to Reflect New Information

To make effective, strategic decisions, you need to constantly consider how new information could affect your plans (and, if so, update your plans accordingly). If you stubbornly forge ahead with plans that new developments have made unwise or even irrelevant, you can waste a lot of time, money, energy, and opportunity.

Taking a personal example, I entered college planning to eventually get my Ph.D. in English and become a professor. Based on the information I had when I started college, this seemed like the right path for me to achieve my desired career and lifestyle goals.

During the course of college, however, I gained lots of new information that ultimately changed my mind:

  • Working as a research assistant showed me that I wasn’t cut out for the bureaucracy of academia.
  • Having conversations with younger professors revealed how little job choice (and thus, location flexibility) humanities professors have.
  • Learning about the concept of opportunity cost allowed me to realize that I had other ways I’d rather spend the 4 – 8 years it would take to get a PhD.

With all of this new information (plus learning about location independence and online business), I changed my plan and ended up pursuing a career as a freelance writer instead.

But this was only possible because I incorporated new information into my career planning process. If I had ignored that information out of the sunk cost fallacy or consistency bias, I probably wouldn’t be writing this article right now.

Your plans will be different, but you can still apply the same process of considering new information, deciding if it’s relevant, and then updating your plans if necessary.

Consider Black Swan Events

I already talked about the importance of thinking long-term, but there’s a neglected part of long-term planning that I didn’t discuss.

When most of us make plans, we consider things that seem “reasonable” or “probable.”

While this is a good start, this planning process doesn’t consider improbable, once-in-a-lifetime events that cause serious disruption.

Nassim Taleb coined a useful term for these cataclysmic events: Black Swans. This metaphor comes from European colonists’ discovery of black swans upon visiting Australia. Previously, European scientists agreed that all swans were white since they had no evidence to the contrary. But discovering just one black swan invalidated their entire view.

A Black Swan, then, is an unpredictable, outlier event with extreme consequences. Not all Black Swans are inherently negative, though the negative ones are more relevant to making plans. (If you want to learn more, I highly suggest reading The Black Swan).

So how can an awareness of Black Swan events help you make better decisions? On the one hand, you can’t plan for any specific Black Swan. A Black Swan is inherently impossible to predict (otherwise it would be a Grey Swan, which I discuss more below). But you can consider how a major, unexpected event might impact your plans (and what you’d do in that case).

For instance, what would you do if a large-scale economic crisis occurred right as you were graduating? Would your current major, skills, and connections still be enough to find a job or another way of earning money?

Or if you aren’t in college, what if a new technology suddenly made your job irrelevant? Are you in a position to pivot to a new job or industry?

Don’t Neglect Grey Swan Events

Finally, you should also plan for Grey Swan events, events that are unlikely but still reasonably possible and potentially harmful.

As Taylor Pearson helpfully puts it, “A grey swan is a semi-predictable event that probably wouldn’t result in death or any sort of catastrophic outcome, but would nonetheless really suck.”

Examples would include:

  • Suddenly losing your job
  • A tree falling on your house
  • Losing power for a couple of days

Insurance, emergency savings, and some basic emergency supplies are typically all you need in such cases. But you should still make sure to have them.

No Plan Is Perfect

I hope this guide has shown you the power of strategic thinking and given you some concrete ways you can use it to make better decisions.

Remember that even the best-laid plans can go wrong; no plan is perfect. But by thinking strategically, you can often anticipate problems you might otherwise have overlooked.

Image Credits: chess pieces

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